6 Small Caps That Could Bump Up Your Year-End Bonus (Part 1)

As we approach the end of the year, it’s the season of year-end bonuses again.

Our bonuses are usually dependent on our work and company performance for the year. But what if there are ways you can bump up your year-end bonus?

According to research houses, there are a number of small-cap stocks that could help you achieve some significant returns, which can bump up your year-end bonus.

1. Moya

3Q17: Recognising Aquatico into its books

3Q17 was the quarter where Moya reflected the full accretion of its latest acquisition, Aquatico.

Following the accretion, Moya recorded year-on-year topline & net profit after tax (NPAT) growth of 845% to $45.8 million and 134% to $5.54 million respectively.

Finding opportunities in non-revenue water

According to RHB Research, non-revenue water (NRW) will become a key growth driver for Moya, considering 41% of Aquatico’s water to the masses are leaking out.

If Moya’s management implements an initiative to cut its NRW by half over the next five years or so by 2023, that might benefit its top and bottom line.

Largest water treatment player in Indonesia

Moya is now the largest water treatment player in Indonesia in terms of capacity. Moya’s management aims to increase this to 20,000 litres/s from its existing 13,000litres/s by 2018.

Its market leader position gives it an advantage, especially when negotiating terms concerning the buyout of existing smaller players.

Cash hoard could be spent on M&As

Moya has already planned capacity expansion for its existing water plants, Bekasi and Tangerang.

Coupled with additional CapEx to reduce its NRW in the next five years, this would help to ensure strong organic growth for the company.

With over $100 million of cash on its balance sheet, Moya could also be on the lookout for potential acquisitions in the near term.

It may continue to acquire other Indonesian private water treatment players and may also use part of the cash hoard to pare down its debt and ultimately, lower its financing costs of SG$6.9 million per quarter.

RHB Research: Moya Holdings Asia Limited (SGX: 5WE) – BUY; $0.17

2. HRnet Group

HRnet Group entered into a binding term sheet with PT Rimbun Job Agency (Rimbun Job) to establish a new brand – Hrnet Rimbun.

Hrnet Rimbun will acquire Rimbun Job’s existing professional recruitment business and provide professional recruitment services in Jakarta, Indonesia.

The joint venture of HRnet Rimbun would add Indonesia to HRnetgroup’s existing presence in 10 Asian cities, increasing its existing pool of job seekers and employers.

The joint venture will create synergy with its current operations as it allows access to the Indonesian market for any cross-border job placements.

Expanding expertise through acquisitions

HRnetgroup’s management has expressed interest in growing inorganically through acquisitions, especially in other parts of the world.

Moreover, with a net cash hoard of $280 million, RHB Research believes the company is well-positioned to go on an acquisition spree, the first possibly to start as early as 1Q18.

This is further driven by the $15-20 million of free cash flow a year and low CapEx requirements of HRnetgroup.

According to RHB, HRnetgroup could target recruitment firms that are specialised in a specific sector add an edge and niche to its existing profile.

RHB Research: HRnet Group Limited (SGX: CHZ) – BUY; $1.14

3. ISOTeam

One-off windfall from sale of existing office

While ISOTeam bought a new office for expansion in Changi about half a year ago, the management is considering to sell off its old office to centralise operations in one location.

As such, ISOTeam would likely be selling off its previous office, which would enable it to enjoy a one-off gain of about $3M.

More opportunities moving forward into FY18

RHB Research expects more new contracts to be won by ISOTeam in the near term, following a recovering property sector outlook and contributions from its solar and Myanmar projects.

ISOTeam’s management has been venturing into a few new projects that would enable it to grow further.

This includes the recently-announced SG Bike venture and cockroach spray, which has been fully launched in Singapore. Previously in May 2016, ISOTeam had tendered for a few local projects in Myanmar.

It has since won a few projects on this front and more revenue contributions from Myanmar can be expected in 2018.